Crypto trading is an exciting and often lucrative investment, with 1 in 10 people investing in digital assets globally. However, no matter how big the return, it’s important to invest responsibly. It’s easy to get carried away, especially when you spot a new coin that promises high profit margins.
If you’re new to trading and are looking for some handy tips before investing, you’ve come to the right place. To help you with responsible trading we’ve put together these top tips for trading crypto for beginners. But first, what does responsible crypto trading actually look like?
What is responsible crypto trading?
Simply put, responsible trading is about exercising restraint and taking personal responsibility for your decision making. This includes limiting your risks and not investing money into crypto that you can’t afford to lose. Overall, this means you should always invest responsibility and never put yourself at risk of financial ruin.
Now we know what responsible trading is, let’s move on to our top tips for trading for beginners.
Top crypto trading tips to trade responsibly
Read below to discover our top 13 crypto trading tips that you should know before investing your hard earned cash.
Attitude to trading as a full-fledged business
If you want to maximize your crypto trading profits, we recommend that you treat trading like a business. Trading is a major part of business. It involves an activity that an individual or a group carry out to generate an income from selling goods. You shouldn’t see trading as a side hustle—successful crypto traders dedicate time to their investments. This involves regularly checking the market, keeping up with the latest news, and following crypto bloggers. Businesses are opportunistic, seizing every chance they can to make money. Traders should do the same.
Doing your crypto market research is often an overlooked step when it comes to trading. However, it’s important to understand which exchange is right for you and your trading habits. You have the option to use either a centralized (CEX) or decentralized exchange (DEX) and both have some great advantages.
CEXs typically provide more services than DEXs, although this varies between exchanges. DEXs, on the other hand, link to non-custodial wallets meaning you have complete control over your funds.
bitoftrade combines the power of both centralized and decentralized exchanges and has created the ultimate DEX platform. With a no KYC policy, multiple features, and over 900 tokens to choose from, bitoftrade offers many of the advantages of trading on a CEX while you stay in complete control of our funds and personal information.
Only risk what you’re willing to lose
Like any form of investment, crypto trading comes with risks. As you probably know, crypto is a volatile currency. Look at the GALA coin for example. In 2021 its worth grew by over 40,445 percent!
Because crypto can be so unpredictable, we advise that you only invest money that you’re willing to lose. This is one of our most important crypto trading tips. Invest too much and you could be setting yourself up for financial ruin. Rushing into making a trade is a recipe for disaster. Successful traders take their time when investing, assessing all potential risks. Remember, be gradual and start with smaller trades. Don’t invest any money that you can’t afford to lose.
Training with a demo account
If you’re new to trading, always start with a demo account. It gives you the opportunity to try trading with virtual accounts on an exchange, without any financial risk. Demo accounts let you use a credited account with a balance of artificial currency and you can use these funds to buy, sell and trade. This is a great way to practice responsible trading.
Investment diversification is a key step to trading success. This is when traders invest in more than one coin or token, with different values and potential valuations. Without a diversification strategy, you risk losing all of your assets all at once because of market fluctuations.
Tips to carry out a successful strategy include investing in different blockchains, diversifying crypto projects by location, and investing in various industries such as DeFi and the metaverse.
Keep your wallet and personal information secure
Crypto is lucrative, and scammers are finding increasingly clever ways to steal your assets. Read on to discover how to protect your crypto wallet and personal information using the following tips.
Two-factor authentication. This is an extra layer of security that makes sure only you can access your wallet. It requires two forms of authentication: a username and password, and then usually a security question.
Write down wallet number or password. For all wallets, you’re given a 12 word seed phrase that gives you access to your trades. Instead of storing this password digitally, we advise you to writeyou write your password down physically (i.e. on a piece of paper) to avoid potential cyber attacks.
Maintain multiple wallets. There’s no limit on how many wallets you can hold, so we recommend holding your investments on multiple different wallets. For example, why not use one wallet for daily transactions and use another for your long term holdings. This method helps to protect your portfolio and prevent any breaches of your account.
Change your password regularly. We’re all told to regularly change our passwords, but whether we actually do this is a different story. When it involves your hard-earned crypto, we strongly recommend changing your wallet password every three months.
Avoid FOMO and maintain a level head
First of all, what’s FOMO?
FOMO means the fear of missing out. We’ve all felt it at some point in our lives, but we shouldn’t let it control us, especially when it comes to crypto trading. FOMO causes irrational behaviour, and it might influence you to invest in a flashy new coin that in hindsight wasn’t a good idea.
FOMO makes it easy to get carried away when trading, by either trying to recoup lost assets or reinvest your gains. Around one percent of the population are affected by a gambling addiction, and trading cryptocurrency is seen as a form of gambling. For instance, an anonymous trader sadly lost millions trading crypto recently. We can’t stress enough that you should always keep your emotions under control and trade wisely.
Stay up to date with crypto news
Cryptocurrency moves fast. That’s why we recommend staying up to date using social networks and specialist blogs. Good crypto social networks include Crypto Twitter, Coin Gecko, and Binance (and our own bitoftrade blog).
Practise responsible trading by always doing your own research before investing your money into your next token or project.
Take advantage of exchange features
Finding one platform that does everything you want can be a challenge. However it’s important to use features that encourage responsible trading, like stop loss and stop limit orders. You should also look out for a platform that has useful features such as limit trading, leveraged trading, and swap trading.
So, what features should you watch out for?
Always use stop loss
Every trader should take advantage of a stop loss order. You might have heard of this, but what’s a stop loss order? Basically, a stop loss is an order placed with a broker to buy or sell a specific stock only when the stock reaches a certain price. This is used to limit an investor's loss on a security position.
Advantages of this tool include that it’s free to use and takes out the hassle of monitoring your stocks daily.
Use a stop limit order
Similarly to stop loss orders, a stop limit order is a conditional trade carried out over a set time frame that combines the features of stop with those of a limit order and is used to reduce risk.
bitoftrade has all of the above features and more in one easy to use DEX platform.
bitoftrade encourages customers to trade responsibly
Like any other type of investment, trading cryptocurrency can be addictive. That’s why it’s important to practice responsible trading. Our guide has all you need to know about how to invest responsibly, and how to start your trading journey.
At bitoftrade we’ve launched the ultimate DEX trading platform with advanced features and a user friendly interface. Using our platform, you can utilize leverage, limit, and swap trades for over 900 tokens on multiple networks.
Expect to see new features launching on our platform such as stop-loss trading, hedging, and more!
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